Australian FOREX Daily Outlook 02/04/2008

Rebounding stocks and falling commodities.

CURRENCY TRADING SUMMARY – 02 APRIL 2008 (00:30GMT)

·U.S. Dollar Trading (USD) the dollar rallied across the board on positive ISM Manufacturing figures were released above expectations, coming in at 48.6 for the month of March (Forecast: 47.5), yet below the key 50 contraction target. In other news, further uncertainty surrounded Financials causing a volatile equities market with UBS the world’s largest wealth manager confirming a loss of 15 billion CHF for the first quarter of 2008. However, news of Lehman Brothers injection of fresh capital ($4 billion) prompted markets to view it as a sign the worst of the credit crunch appears to be over. In U.S. share markets the NASDAQ was up by 291.20 (+3.31%) whilst the Dow Jones also rallied by 391.47 points (+3.19%). Crude oil fell for the third consecutive day by US$0.30 a barrel to US$100.17. Looking ahead, Fed Chairman Bernanke is scheduled to speak in front of a joint economic committee, whilst ADP employment will once again pose as precursor to Non Farm Payrolls this Friday.

·The Euro (EURO) eased considerably on news that US manufacturing had contracted less then expected for the month of March. Eurozone PMI Manufacturing was released on expectations at 52. In other news, Unemployment in Europe largest economy (Germany) fell to its lowest level since 1992 to 7.8% for the month of March (Previous: 8%). Overall the EURUSD traded with a low of 1.5564 and a high of 1.5785 before closing the day at 1.5600 in the New York session. Looking ahead PPI figures for the month of February are made public out of the EU on Wednesday.

·The Japanese Yen (JPY) fell sharply against the Japanese Yen, after stronger than expected ISM data from US pushed it towards 102.00. Overall the USDJPY traded with a low of 99.60 and a high of 102.16 before closing the day at 102.01 in the New York session

·The Sterling (GBP) eased the UK Financial sector continues to feel the brunt of the global credit crunch. The Sterling Pound also gave up its mid-session gains on a broadly stronger dollar boosted by positive ISM readings. Overall the GBPUSD traded with a low of 1.9731 and a high of 1.9874 before closing the day at 1.9731 in the New York session.

·The Australian Dollar (AUD) saw the RBA leave its cash rate at 7.25% as widely expected, as comments made note of “overall tightening in financial conditions since the middle of 2007 has been substantial”, whilst growth in domestic demand appears to be moderating as inflation is perceived to decline over time. Furthermore, lower commodities once again weighed heavy on the Aussie. Overall the AUDUSD traded with a low of 0.9030 and a high of 0.9148 before closing the day at 0.9057 in the New York session.

·Gold (XAU) tumbled further by US$33.70 an ounce on lower oil prices and liquidation of long gold positions. XAU traded with a low of 873.80 and a high of 920.60

TECHNICAL COMMENTARY

·Euro – 1.5610

Initial support at 1.5554 (61.8% retracement of the 1.5324 to 1.5896 advance) followed by 1.5473 (76.4% retracement of the 1.5324 to 1.5896 advance). Initial resistance is now located at 1.5787 (April 1 high) followed by 1.5896 (Mar 31 low).

·Yen – 101.70

Initial support is located at 99.59 (Apr 1 low) followed by 98.56 (Mar 27 low). Initial resistance is now at 102.19 (50% retracement of the 108.61 to 95.75 decline) followed by 103.59 (Mar 11 high)

·Pound – 1.9780

Initial support at 1.9722 (Mar 5 low) followed by 1.9607 (76.4% retracement of the 1.9363 to 2.0398 advance). Initial resistance is now at 1.9875 (Apr 1 high) followed by 1.9979 (Mar 31 high)

·Australian Dollar – 0.9085

Initial support a 0.9024 (76.4% retracement of the 0.8953 to 0.9254 advance) followed by 0.8979 (Mar 24 low). Initial resistance is now at 0.9151 (Apr 1 high) followed by 0.9254 (Mar 27 high)

·Gold – 886.70

Initial support at 872.50 (Apr 1 low) followed by 849.50 (Jan 22 reaction low). Initial resistance is now at 921.0 (Apr 1 high) followed by 940.60 (Mar 31 high)